The neural cell adhesion molecule (NCAM) is involved in development of the nervous system, in brain plasticity associated with learning and memory, and in neuronal regeneration. NCAM regulates these processes by influencing cell adhesion, cell migration, and neurite outgrowth. NCAM activates intracellular signaling upon homophilic NCAM binding, and this is a prerequisite for NCAM-stimulated neurite outgrowth. NCAM is synthesized in three main membrane-bound isoforms, NCAM-120, NCAM-140, and NCAM-180. Soluble forms of NCAM in blood and cerebrospinal fluid have also been found, although the functional significance of these forms remains unclear. In this report, we demonstrate that NCAM can be released from primary hippocampal neurons in culture. The release was enhanced by application of ATP and inhibited by the metalloproteinase inhibitor BB-3103. ATP also induced metalloproteinase-dependent release of all three major NCAM isoforms from NCAM-transfected fibroblastoid L-cells. In this model system, the extracellular ATP-binding site of NCAM was shown not to be necessary for ATP-induced NCAM release. Furthermore, inhibition of serine, cysteine, and aspartic proteinases could not prevent ATP-induced down-regulation of NCAM in L-cells, suggesting that NCAM is cleaved directly by a metalloproteinase. Aggregation of hippocampal neurons in culture was increased in the presence of the metalloproteinase inhibitor GM 6001, consistent with a metalloproteinase-dependent shedding of NCAM occurring in these cells. Moreover, NCAM-dependent neurite outgrowth was significantly reduced by application of GM 6001. Taken together, these results suggest that membrane-bound NCAM can be cleaved extracellularly by a metalloproteinase and that metalloproteinase-dependent shedding of NCAM regulates NCAM-mediated neurite outgrowth.